Although one of the primary goals of Bitcoin is to create a currency that is borderless and decentralized, a recurring concern is the way (other than mining) that we are able to actually acquire it and other cryptocurrencies. Crypto exchanges became a necessary component of this equation, and they hold a huge influence over the crypto market worldwide.

At the San Francisco-based blockchain conference Distributed 2018, Ben El-Baz, Chief Strategy Officer at XDAEX, moderated a panel of experts and entrepreneurs involved in international cryptocurrency exchanges, using his own experience at a Hong Kong exchange to ask piercing questions.

Although the exchanges in question were centered in a wide range of areas, the discussion generally centered around the possible impacts of regulation, pros and cons of tokenized business models and user experience.

Tawanda Kembo is the CEO and founder of the crypto exchange Golix, based in Zimbabwe, which is currently one of the longest-running exchanges on the continent. Concerned by the hyperinflation in his country, Kembo founded Golix to try and solve the problem of crypto liquidity in Africa, and discussed some of the challenges and successes of this project.

Jesse Powell is the founder and CEO of Kraken, an exchange that deals heavily in the U.S. and the EU, and he provided insight into the world of more established crypto markets.

Maggie Hsu, part of the business development team at AirSwap, focused her discussion points on the possibilities of decentralized exchanges, as many central exchanges can hold disproportionate influence.

Each of these speakers brings a special focus to the topic of worldwide cryptocurrency exchanges, and their panel goes into great detail on a variety of topics. For the full discussion, and panels on a diverse range of topics in the blockchain and cryptocurrency space, visit Distributed’s YouTube channel.

The Venezuelan government is cracking down on remittance payments with a new banking mandate, one that could put the country’s Bitcoin users on an even tighter leash.

In a letter “addressed to all banking institutions,” the government has ordered all domestic banks to disclose the IP addresses, financial details, transaction amounts and locations of all citizens who access their banking services from outside the country.

Per the measure, Venezuelans are expected to “notify [their] banking institution of [travel] instances prior to [departing], explicitly indicating their destination place(s)” and how long they’ll be out of country, the letter reads.

If a citizen fails to comply with the above stipulations, banks may “enact a special condition that restricts the ability of the client to make online transactions,” effectively locking them out of their bank accounts if they are caught accessing services outside of the county. The bank is then required to “report the policy holder’s name; identification of the resource/asset; date and place of provenance; date of imposed restriction and the IP address from which access was attempted” to the National Entity of Financial Intelligence.

“Lack of compliance with the above stated,” the letter concludes, “will result in the imposing of sanctions in accordance with the terms outlined by the legislative decree.”

An Attempt to Monopolize Money Transfers

The measure, self-described as a means to “preserve the interests of the users and of the general public,” is the government’s attempt to strongarm the community of Venezuelans who migrate to neighboring countries, such as Argentina, to send money home. Their own country’s economy ravaged by hyperinflation, these expats seek work abroad in hopes of earning a living wage to support themselves and their loved ones.

It’s these citizens funneling money back into the country that the government wants to police with its new order.

“A lot of people are sending money to their relatives in Venezuela and they want a cut of that,” Venezuelan Eduardo Gómez, head of support at Purse.io, told Bitcoin Magazine. This strategy, he continued to explain, is much like the Cuban government’s own monopoly over cross-border transaction clearing.

“If you look at what Cuba is doing … the biggest revenue source for Cuba is remittances; it’s all the Cubans living in Florida, in Miami, sending money home to their families. If you want to send money to Cuba, you have to go through the government to sell dollars for Cuban pesos.”

Venezuelan officials are reaching for the same control. In sanctioning state-approved trading houses, which as Gómez suggests are in the government’s back pocket, politicians are hoping to reroute all remittances through these institutions to take a cut of payments. The bank order is the means by which the government intends to coerce citizens to use these services.

And their IP addresses are the leverage. As the order indicates, if a client is caught accessing online banking services abroad, or she fails to report the required information to her bank, then that client could lose banking privileges.

Gómez told us that the government has already come down on citizens using middleman services who offer cheaper money transfer services in neighboring countries, citing his siblings’ use of such services in Uruguay.

This new measure will look to sweep up those they’ve missed, including users of well-known OTC Bitcoin exchange LocalBitcoins.

With Remittances in Sight, Bitcoin Users Caught in Crossfire

“Bitcoin is a threat to [the government] because people are using LocalBitcoins to trade money around,” Gómez said.

While Gómez admitted that there’s less volume on Latin America’s LocalBitcoins hubs compared to international exchange volumes, he did say that “volume is increasing,” as it has become a popular remittance option to circumvent government-sanctioned trading houses.

Expats will even use the service as an alternative to foreign currency transfer intermediaries. Many Venezuelans living and working in Argentina, for example, will convert their Argentinian pesos into bitcoin. Using LocalBitcoins, they’ll search for a Venezuelan trader who uses the same bank as them, something that can be tricky depending on rates, bitcoin-to-bolivar liquidity and transaction size. Once a user finds the right match, they’ll give the buyer their bank account number — or, in some situations, that of a relative — and settle the transaction.

Under the government’s new requirements, Venezuelans who deposit directly into their own bank accounts could be in trouble, Gómez said, as they could have their banking services shuttered on account of illegal use — with similar consequences for those buyers transferring the funds. If the measure takes its desired effect, Gómez believes that it could have damaging ramifications on Bitcoin’s use and LocalBitcoins’s presence among Venezuelans.

“What this means for Bitcoin in the short term is that it could take some liquidity from LocalBitcoins because I have heard some rumors that a lot of Latin American traders for LocalBitcoins are Venezuelans living abroad. A lot of these guys left the country years ago, so what may happen is that a lot of those traders won’t be able to log into their bank accounts.”

Theoretically, this is easy to overcome. Instead of transferring funds into your own account, for instance, you could have them sent to a relative, instead. Gómez forecasts this as a likely outcome — one that, if it causes an uptick in LocalBitcoins’s popularity, could lead the government to shut down domestic access to the platform entirely.

“In the long term, the government may restrict LocalBitcoins via something like DNS blocking or IP blocking to restrict access to LocalBitcoins in Venezuela. If they see that a lot of people are using LocalBitcoins to circumvent this IP restriction, then they may see it as a threat.”

Still, this action would be a long time coming if it’s ever executed, Gómez predicts, for the same reason why LocalBitcoins is the only cryptocurrency exchange still active in the country: officials use it.

“A lot of people inside the government use LocalBitcoins to sell their bitcoins that they earn via mining because all of the government officials mine,” he said.

Even as the Venezuelan police raid local mining operations, government officials themselves mine with immunity, having bootstrapped their own rigs since the market’s 2017 bull run. Seeing as it’s so popular among officials, Gómez thinks the government will leave the exchange alone — for now, at least.

Bigger Than Bitcoin

In our talk, Gómez indicated that the government’s banking order will no doubt create headaches for Venezuelan Bitcoin users. But by and large, the order is about effecting greater control over all aspects of the economy. Wrangling in Bitcoin users, specifically those sending money across borders, is just one degree of this control.

“Ultimately, the government wants a cut of the pie for remittances,” Gómez said.

LocalBitcoins is certainly cutting into the government’s transaction processing profit, but it’s not only used for money transfers. Gómez also told Bitcoin Magazine that Venezuelans use the service to check the bolivar’s rate against the U.S. dollar, which has become a de facto trading standard for many in-country services.

Venezuelans used to reference DolarToday, a popular service for transparent bolivar-dollar rates. But ever since rumors began to spread that the Venezuelan government covertly purchased the domain to control the rates, “LocalBitcoins is becoming the market reference for the dollar,” Gómez said. Users will refer to the bitcoin-bolivar rate against the bitcoin-dollar rate to arrive at a reliable bolivar-dollar rate.

The government’s economic war, as Gómez indicated, is total — one that looks to tighten the noose around any service or tender that works around officially sanctioned services. Given LocalBitcoins is proving to be a multifaceted tool for those Venezuelans who use it, it’s reasonable to assume that, if its popularity continues to surge, the government may take action.

If it does, this could completely throttle the last access points Venezuelans have to cryptocurrency platforms and services. Gómez said that even though LocalBitcoins is the only operable exchange left in the country, “there’s [still] a lack of liquidity.”

In the event of this closing, Venezuelans will have yet another hurdle to jump when attempting to use crypto; this would neutralize one of the only economic safe havens citizens have left as the bolivar continues to hemorrhage value.

“Venezuelan salaries are so low that there’s not even a way for people to buy crypto. To put things into perspective, the average salary in Venezuela for one month of work is $1. Can you imagine that? Working a full month and only earning $1 at the end of it,” Gómez concluded in our talk.

Origin Protocol, one of the early initial token offerings listed on CoinList, has announced the launch of its new decentralized messaging service. Origin’s latest offering could challenge encrypted giant Telegram, which, while not decentralized, is widely used within the cryptocurrency community.

Decentralized Options for Origin Participants

Origin Messaging was designed to meet the need for a decentralized messaging system, not only for Origin, but for the entire ecosystem. The team believes this is a core service to their marketplace. In their words:

Speaking with Bitcoin Magazine, Origin Co-founder Josh Fraser said the company is built on the belief that “buyers and sellers” should be able to “transact without rent-seeking middlemen.”

He continued, “When you cut out the middleman, you also remove their fees, and both the buyer and the seller are able to get a better price. We’re passionate about promoting free and transparent commerce and giving our community a stake in the network.”

The team has expressed confidence that a decentralized, encrypted, real-time service will best suit users. The Origin Messaging service was designed by leading research and development engineer Yu Pan, who is a co-founder of PayPal and a top engineer at YouTube.

Origin engineer Micah Alcorn outlined the features in Origin’s blog post. These include an open-source framework and secure, end-to-end encryption. According to him, user privacy is paramount, and no one — including Origin and the National Security Agency (NSA) — should have the ability to eavesdrop on user conversations.

The platform is also fully decentralized, built on top of OrbitDB, which is a serverless, distributed, peer-to-peer database that uses IPFS as its data storage and IPFS pubsub to automatically synchronize databases with peers. Furthermore, it is entirely free because though it leverages Ethereum’s infrastructure and signing capabilities, no messages are published to the Ethereum blockchain, which means there are no associated gas fees.

He also lists speed, auditability, ease of use and anonymity as useful features of the new platform. Interestingly, the Origin dApp is ERC-725 compatible, which means users can create non-fungible assets that are used to verify the authenticity of the message recipient’s identity.

According to Origin, “ERC-725 gives you a smart contract that you alone control. This smart contract represents your identity on the blockchain. You can attach as much identifying information to your identity smart contract as you want. You can also get attestations from other trusted third-parties like Origin that verify specific aspects of your identity and add those to your identity smart contract. You can see an example of this in action in the Origin dApp where Origin will verify information like your email address, phone number and Facebook account. After Origin verifies that you control those accounts, we will sign an attestation on your behalf that you can attach to your identity smart contract.”

Of course, users also have the option to include no identifying information at all and choose to be known as nothing but an Ethereum address.

Origin is not the first cryptocurrency project to pitch a decentralized messaging service. Obsidian, a fork of Stratis, for example, has launched its own decentralized messaging platform. Popular messaging app Telegram also had plans to decentralize its services by launching an ICO, though it took a step back from this plan in May of 2018 by canceling the public portion of its fundraising.

In order to make payments on the lightning network — Bitcoin’s second layer solution for instant and cheap transactions — users must first fund lightning channels. This process, however, creates a slight disconnect between lightning users and on-chain users. Lightning users can pay lightning users, and on-chain users can pay on-chain users, but they can’t pay one another directly.

To solve this, “Submarine Swaps” allow users to make trustless transactions between lightning addresses and on-chain addresses in either direction. The technology could be a game changer for both Bitcoin lightning and mainnet users, as it would remove the transaction barriers between them.

“[I] think this makes it a lot more attractive to [run] a lightning-only service,” Submarine Swap’s developer Alex Bosworth told Bitcoin Magazine, as on-chain users wouldn’t beexcluded. “You don't have to [...] worry about including the on-chain people,” he said. “You can outsource that to somebody else, and you don’t have to trust them.”

What Are Submarine Swaps?

Using the same cryptographic tricks as those used in the lightning network, Submarine Swaps use a trustless middleman to link a Lightning channel transaction with an on-chain one. This middleman, likely a program called a swap provider, is tasked with settling both the on-chain and off-chain transactions with both users, bridging the gap between Bitcoin’s network and the lightning network.

If one lightning network user wants to send funds to an on-chain user, for example, the middleman will transfer these funds to its own lightning wallet, if (and only if) he sends a transaction with comparable funds on the Bitcoin blockchain to the desired on-chain address. The process works the same in the inverse if an on-chain address wants to send funds to a lightning address.

“There's lots of different ways it can be used,” Bosworth said. “So let's say an exchange wants to send to a lightning invoice but it doesn’t have lightning funds, or it doesn't have a lightning wallet; in that case, it could ask somebody who does have that to assist them, and then they could do so in a way where its locked to their on-chain unit.”

He continued to explain that the feature could ultimately be integrated into wallets, enabling an on-chain client “that doesn’t even know about lightning” to transact with its users.

Bosworth also pointed out that the swap providers could be the one and the same person. “It’s flexible in that respect. So you can have it be either a [third party] or it could even be yourself.”

When asked if the swapping mechanism would want for liquidity, Bosworth said that he believes transaction rewards will incentivize enough users to front their bitcoin for transactions. “[Users] are incentivized by the swap rate to provide liquidity, I think that will attract more liquidity. This is a low risk operation, so I can either have my coins just sit there doing nothing or I can have them available for swaps and generate some revenue,” he stated.

The Submarine Swaps concept was originally conceptualized by Lightning Labs CTO Olaoluwa Osuntokun — though Bosworth came up with the same idea independently. The technology can be applied in various use cases, as Bosworth envisions.

The technology is still in its infancy, as Bosworth explained, and it’s also contingent on the development of existing lightning network applications.

“I’ve started doing tests on mainnet, and you can try testing it out on Submarine Swaps so you can see a swap in action, but there’s lots of stuff to work out and the LND still needs work; they’re working on a major new release, so things are moving along but I wouldn’t say it's like super safe because not everything is 100 percent yet.”

After a brief hiatus, the Let’s Talk Bitcoin show is back with an informative episode on the intersection of “Wall Street” financial tools and the Bitcoin space. For those who are unfamiliar with how mainstream financial tools are being applied to cryptocurrencies, this episode serves as an ideal primer to become well-informed on the topic.

The episode features an hour-long interview with Caitlin Long. A 22-year Wall Street veteran who has been active in the Bitcoin space since 2012, Long is the former chairman and president of enterprise smart contract platform Symbiont and founder of the Wyoming Blockchain Coalition.

While discussing the topic of exchange-traded funds (ETFs), the hosts examine the opportunities a person has to “invest” in bitcoin without actually using it, such as hosting nodes or even simply having a public key. Largely uninterested in participating in the decentralized project of Bitcoin, these Johnny-come-latelys mainly want to make a quick buck.

The episode details two main topics: the exact specifics of these financial tools and some of the potential market risks associated with them. The conversation includes opinions on the possible implications of these financial tools and what they could mean for the success of Bitcoin’s vision.

For more episodes of Let’s Talk Bitcoin and other podcasts on cryptocurrency and related topics, subscribe to the Let’s Talk Bitcoin Network.

The Italian football club Rimini, which plays in the Italian Serie C division, has sold a portion of the team’s shares in exchange for cryptocurrency.

The first-of-its-kind acquisition was made by Heritage Sports Holdings (HSH), a sports investment company based in the United Arab Emirates. Contrary to initial reporting by various outlets, the club’s shares were not purchased with bitcoin. Instead, representatives used Quantocoin (QTC), a Gibraltar-based cryptocurrency, to buy out roughly 25 percent of the team’s shares. One of the project’s partners, Pablo V. Dana, is a partner and shareholder at HSH, as well.

The announcement came by way of Rimini’s president Giorgio Grassi. In a press release, he states:

“Negotiations with this group have been ongoing for a couple of months. Heritage Sports Holdings, with its partner Quantocoin, will try to bring to the team and to the city new ideas and synergies from the sporting, brand image and technological point of views. Heritage Sports Holdings’ participation is innovative in view of its crypto payment system and its use of blockchain technology.”

HSH was founded in 2013. The company operates as both a facilitator in football teams’ acquisitions and as a direct investor in ventures related to football in both Asian and European countries. Other clubs owned by HSH include Union Deportiva Los Barrios, a Spanish football sixth division team, and Mantova football in Italy. HSH also owns Gibraltar United, one of the first football clubs to pay part of its players’ wages in digital currency.

Rimini is an old club with a troubled history. The organization filed for bankruptcy in 2006, even after playing Juventus at Stadio Romeo Neri, a highly anticipated match that ended in a 1-1 tie. The group later faced several problems, including the exits of several board members, which led to Rimini vanishing from the playing field and being re-founded three times.

With the team now back in the league, Grassi announced the cryptocurrency purchase, which is the first of its kind for any professional sports team.

“This acquisition will enter the history of football, bringing a very important resonance to the city of Rimini. In recent weeks, Heritage Sports Holdings has shown great interest in the Rimini brand and in our innovative approach to football. The new members appreciated the transparency of Rimini F.C., its economic sustainability, its territoriality, its commitment to the world of solidarity, and the critical mass that our world expresses with all its affiliated companies.”

The cryptocurrency industry has made a presence for itself on the international football scene. In addition to today’s news and Gibraltar United’s crypto salary option for its team, eToro recently entered in a partnership with the English Premier League in an effort to bring cryptocurrency to the league’s payment structure.

Many people know bitcoin as an anonymous digital currency, one whose privacy features prime it for concealed payments in sketchy recesses of the internet’s dark web.

These same people would likely be surprised to learn that bitcoin is far from anonymous. More pseudonymous than anything, its underlying technology, the blockchain, actually features a number of technical windows through which users could peep another user’s identity. These interested parties, be they analytics companies, governments or anyone with sufficient IT knowledge, can use peer-to-peer network analysis to link a Bitcoin public address to an IP address, allowing them to learn who owns a wallet and who they’re sending their funds to.

In tracing transactions and public addresses back to their users’ IP addresses, these “spies,” also known as “adversaries,” are effectively deanonymizing users. An obvious breach of privacy, the Bitcoin community has long wrestled with solutions to neutralize this problem.

Entering the conversation is Dandelion, a protocol developed by Giulia Fanti along with Shaileshh Bojja Venkatakrishnan, Surya Bakshi, Bradley Denby, Shruti Bhargava, Andrew Miller and Pramod Viswanath, researchers at Carnegie Mellon, MIT and the University of Illinois. If theory can hold up in application, Dandelion would effectively neutralize the peer-to-peer analysis that plays a significant role in compromising user identity.

The Problem

Whenever someone sends a transaction on Bitcoin’s network, typically, that transaction is broadcasted to multiple nodes until it is picked up by a miner and included in a block.

This broadcasting process is known as diffusion. It begins when the source node, the node that creates the transaction, transmits it to other nodes on the network. Once this node broadcasts the transaction, each of the other nodes that make up the network continues to independently diffuse the transaction by sending it to others with exponential delays.

Presenting Dandelion at the Building on Bitcoin conference in Lisbon, Portugal, Giulia Fanti explained that the source node’s IP address can often be discerned because “diffusion is susceptible to detection.” When collaborating spy nodes receive a transaction, they can engage in peer-to-peer network analysis to retrace its steps through the network.

Basically, by observing the timing of each broadcast and examining the structure of relays, spies can trace — with a high probability that isn’t necessarily foolproof — a transaction back to its source node. From here, the spy has high odds of gleaning the IP address of the transaction sender.

Dandelion’s Solution

Dandelion aims to abstract the transaction relaying process to make it more complicated for adversaries to trace transactions. This would, in essence, make it nearly impossible to follow the breadcrumb trail that broadcast timings and relay structures lead back to the source node that originally transmitted the transaction.

To achieve this, Dandelion sends the transaction on a random path through a variable number of nodes before the transaction is diffused across the whole network. The random pathway is known as the stem phase of the protocol, as transactions relayed in the stage are shared only between one another, transmitting from one node to the next. The diffusion phase is known as the “fluff phase,” as the transaction is broadcasted to multiple nodes to be spread across the network (visually and in effect, both of these processes replicate a Dandelion’s anatomy, hence the terminology).

Screenshot of the Dandelion structure as illustrated in Fanti’s talk.

In the stem phase, each node essentially has a 50/50 chance to either continue the stem phase by relaying the broadcast to another node or diffuse the transaction to the rest of the network. If passed on, the next node plays the same odds and the transaction is passed along, one by one, until one triggers the diffusion process.

Adding the first transaction phase before diffusion is meant to provide an added layer of anonymity to the transaction broadcasting process. If the network passes the transaction to multiple potential source nodes before diffusion, this should, in theory, obfuscate where a broadcast came from, thereby making it exceedingly difficult to definitively trace a transaction back to its source.

Dandelion’s Growth

Dandelion’s proposal is considered to be a feasible step toward solving Bitcoin’s anonymity question that doesn’t involve overhauling its code entirely to outfit it with the kind of peer-to-peer network obfuscation tools a coin like Monero is developing, for example.

The team is often asked why it won’t implement the same onion routing that Monero is focusing on. Fanti admitted in her talk that “Monero is addressing the exact same problem [Dandelion] is trying to solve,” but qualified this by stating that “implementing this is actually really time intensive,” as the Monero development team has been working on it since 2014.

Focusing instead on its own ground-up approach, Dandelion has come some way since it was first introduced in 2017. After a peer review of its code found some glaring holes, the team revamped their efforts and re-released a new white paper with an updated method (known as Dandelion++) in May of 2018.

It’s expected that Dandelion will be implemented into a future Bitcoin Core update, though it will not be ready for the forthcoming 0.17.0 release.

Today we kick off the show talking about the fake news of Alex Jones Pirate Radio FCC take down. Which is a complete media fabrication started by the Austin American Statesman. Christopher Greene of BitcoinRich.com joins us in studio to add his local flair as a Phoenix area crypto evangelist. Finally the second half of the show Cody Wilson joins in to fill us in on the latest with multi-state retaliation for his victory over the State Dept. regarding gun files on DefCad.org Cody is currently raising funds to battle these predatory States in court powered by Bitcoin and a booster shot by Bitcoin.com

Crypto is making its entrance into the world’s academic scene, and students are lining up to learn.

A recent Coinbase study reveals that University students want to learn more about cryptocurrency and blockchain technology. Commissioned by Coinbase in partnership with Qriously, the survey sampled 675 U.S. students, and it found that students across all majors have an interest in blockchain technology.

Some have literal vested interest in the cryptocurrency market itself, while others are looking to leverage blockchain courses to break into the space’s developing job market. Of those surveyed, 18 percent reported holding some value in cryptocurrency. Another 26 percent indicated that they’re interested in taking a blockchain-related course in the future, with the most immediate interest coming from social science (47 percent) and computer science (34 percent) majors.

Benedikt Bunz, a doctoral student at Stanford, said the "tremendous excitement" around the blockchain and cryptocurrency courses is due to the ease of getting a job after graduation due to the high demand for blockchain experts.

“If you’re an expert in cryptocurrencies and cryptography you’ll have a difficult time not finding a job,” he noted.

The survey also studied the top 50 universities in the world as ranked by the U.S. News and World Report, and it found that 42 percent offer at least one class on relating to the blockchain industry. Geographically, the study indicates that cryptocurrency courses are more popular in the U.S., with Stanford and Cornell University topping the charts for most individual offerings. Outside of the U.S., only "five of the 18 international universities" surveyed offer at least one class on blockchain technology or cryptocurrencies in general.

One of its more salient findings, the survey highlights the high demand for crypto and blockchain courses across a wide spectrum of departments. Unsurprisingly, most of this demand stems from the finance and computer science disciplines.

“Coinbase’s analysis found that, of the 172 classes listed by the top 50 universities, 15 percent were offered by business, economics, finance and law departments, and [4] percent were in social science departments such as anthropology, history, and political science,” the report notes.

Dawn Song, a computer science professor at University of California, Berkeley, said the rise in the interest in blockchain courses is due to the potential impact the technology can have on society.

“Blockchain combines theory and practice and can lead to fundamental breakthroughs in many research areas. It can have really profound and broad-scale impacts on society in many different industries.”

Song, who co-taught the “Blockchain, Cryptoeconomics, and the Future of Technology, Business, and Law” in the spring semester of 2018 said the course was so popular that they had to turn students away because the auditorium was filled up.

Elsewhere, David Yermack from the New York University Stern Business School plans to offer his blockchain course in both semesters this academic year as opposed to just one semester like last year. Yermack launched his course on blockchain and financial services in 2014, and with an original enrollment of 35 students, it featured a smaller class size than the school's typical elective at the time. By spring 2018, however, the number of enrolled students had increased to 230, a tangible reflection of the growing interest and enthusiasm students are exhibiting toward the field.

Morgan Creek, a capital management company that oversees more than $1.5 billion in assets, has partnered with Bitwise Asset Management to create the Digital Asset Index Fund.

The new cryptocurrency asset fund is the latest in Bitwise’s suite of cryptocurrency investment offerings, as the asset management company already owns the HOLD 10 Index Fund. It also aspires to launch a cryptocurrency ETF in the near future.

As with the HOLD 10 Index Fund, this index takes aim at institutional investors looking to enter the digital asset market. According to its website, the Digital Asset Index Fund “securely tracks the largest investible digital assets and provides approximately 75% coverage of total digital asset market capitalization. The index will weight the majority of its portfolio on bitcoin, with ether receiving the second largest allocation.

One of the fund’s most notable advisors is Anthony Pompliano, who has worked for Morgan Creek since his crypto-focused venture capital firm Full Tilt Capital was acquired by the investment house in Q1 2018. In addition to Pompliano, Morgan Creek CEO Mark Yusko and Bitwise global head of research Matt Hougan also sit on a committee specifically assembled to oversee the fund’s overall direction.

Like Bitwise’s HOLD 10 Index Fund before it, the Digital Asset Index Fund rebalances monthly and holds a weighted portion of several different cryptocurrencies. Along with bitcoin and ether, the fund will include bitcoin cash, EOS, litecoin, ethereum classic, zcash, monero, dash and OMG. The fund will also look to conduct annual audits to bolster the funds security.

Notably, due to the fund’s selection process, coins like Ripple’s XRP and Stellar’s lumen were intentionally left out. Explaining the fund’s rationale to Forbes, Pompliano said it excluded a coin if “a central party … owns 30% or more of supply,” believing this “introduces a lot of additional risk that may not be there if it was a more decentralized network.”

In addition to XRP and lumen, IOTA and Cardano were also excluded from the index for not meeting Bitwise’s cold-storage custody requirements.

Even without these additions, the two firms feel confident about the new index. “We’re fully prepared and feel we’ve built something that institutional investors will find attractive regardless of how the assets are categorized,” Pompliano told Forbes. “Whether they’re securities or not.”

Morgan Creek and Bitwise’s joint fund continues a movement that has looked to create a secure investing environment for institutional players looking to enter the market. Coinbase, for example, established its own crypto index fund and custody service in an attempt to quell the anxieties of institutional and accredited investors, who are often repelled from investing in the industry over concerns regarding fund security, asset management and technological learning curves.

The Canadian government has postponed the release of its final regulations for cryptocurrency and blockchain companies. The final published regulations were due this fall, but the government now says they won’t be published in the Canada Gazette until late 2019.

Because the federal government is already in pre-election mode ahead of the 2019 election, the final cryptocurrency or “virtual currency” regulations have effectively been put on hold, leaving the current regulatory regime in place until well into 2020, as there is an additional 12-month period after publication for any new regulations to take effect.

Some companies in the space see this as a positive for the industry’s competitiveness as the government is effectively backing away from the stricter rules proposed in the draft version published in June 2018.

Others are concerned that this delay will harm their competitive position in the quickly growing international crypto market, where countries like Switzerland and Malta are actively encouraging crypto businesses with few regulations and a favorable tax regime.

The Blockchain Association of Canada (BAC) told Bitcoin Magazine that it appreciates that the government is proceeding with caution, in recognition of the complexities of this new, evolving sector.

“The decision to delay the proposed regulations bodes well for the Canadian blockchain and cryptocurrency space. The government is committed to an innovation agenda and sometimes … it may be best to observe and intervene as little as possible,” said BAC Executive Director Kyle Kemper.

Large Volume of Submissions From the Crypto Sector

According to a number of participants, the sheer volume and quality of the comments and responses by the industry to the proposed regulatory package likely contributed to the government's decision to hold off on publishing until next year.

Cryptocurrencies and blockchain companies and organizations, like the Money Services Business Association, were invited to submit comments and attend meetings with Finance Canada officials.

BRI Calls for a Central Regulatory Body Comparable to the SEC

One set of comments submitted to the federal finance department included a report from the influential Toronto-based Blockchain Research Institute (BRI).

The BRI assembled a round table of 70 participants from the industry and submitted a report with carefully thought out, detailed recommendations.

The report says there’s substantive regulatory work that needs to be done to create certainty and build a competitive industry, although the participants called for a middle ground, saying:

“... as the blockchain revolution unfolds, regulators would be wise to avoid the chainsaw when microsurgery could do. To be sure, we do not want the Wild West.”

The BRI report points out that Canada is the only developed federal democracy that does not have a securities regulatory authority at the federal government level and recommends creating a central regulatory body at the federal level like the U.S. Securities and Exchange Commission (SEC).

Instead, “ten provinces, three territories, and the federal government all juggle responsibility for ensuring capital market functions efficiently and honestly — attempting to keep a watchful eye on issuers, investors, investment dealers and other market players.”

“This model was set up to oversee a much simpler world where there were actual traders on stock exchange floors, and where the pace of innovation in capital markets was glacial and regionally confined,” adds the report.

Continuing Uncertainty in the Crypto Sector

Coinsquare Exchange CEO Cole Diamond, as a member of the BRI’s Advisory Committee, made the case for more regulatory clarity. He told Bitcoin Magazine:

“I don’t think that delaying regulatory clarity is a good thing. At the same time, I understand how complex this market is. The regulators are still learning, and I can assure everyone that they are trying.”

“My hat goes off to the OSC Launchpad, the Ministry of Finance and others for their focus on the market. We look forward to continuing to work with them to bring about opportunities for Canadian businesses to lead globally in this exciting space.”

Evan Thomas, a Toronto-based lawyer working with crypto startups on regulations and compliance, also thinks that there needs to be some serious work done on regulating cryptocurrencies and blockchain companies.

Thomas told Bitcoin Magazine:

“Delay can put Canadian businesses at a competitive disadvantage. Other jurisdictions are moving more quickly to establish regulatory frameworks around crypto, to the extent those frameworks don't already exist.

“Until the regulations are final, it will be challenging for Canadian crypto businesses to establish critical banking and other relationships because many financial sector players are waiting for a regulatory framework to be in place. The longer the delay, the harder it may be for the industry to grow in the meantime.”

Scott told Bitcoin Magazine that “for the time being, things stay as they are. We advise companies to start thinking about the resources that they will need to deploy when the final version is published but to wait for that version to deploy development because things are likely to change at some point.”

In Thomas’s view, this delay will hurt companies in the space, some of whom will go ahead anyway to regulate themselves. He noted that “Canadian crypto businesses are implementing compliance programs even when not legally required because financial partners require them or for general risk management. The longer the delay, the more costly it may be to re-work those programs to meet the final regulations.”

The crypto industry has scored another first, as a junior U.S. Senator from Montana, Steve Daines, has lobbied against the planned closure of a coal-fired power plant in Rosebud County, arguing that its closure could harm the growing cryptocurrency mining industry in the state.

According to reports, the Colstrip coal plant in Rosebud County is scheduled to shutdown by 2027 as State and Federal governments in the U.S. look to transition toward clean and renewable energy sources.

Unusual Situation

Elsewhere in North America and around the world, crypto mining generally takes place where cheap power is available, which is the case in Montana, but with one key difference: most other crypto mining hubs with access to affordable electricity make use of renewable energy.

Indeed, mining ventures have increasingly flocked to sources of renewable energy in an effort to generate greater profit, as is the case in Scandinavian countries, which make use of hydroelectric and geothermal energy, or America’s Pacific seaboard and China’s Sichuan mountain region.

In Montana, however, vast coal deposits and several coal-fired power plants supply an abundance of cheap electricity, and this has attracted a growing number of mining farms to the area. According to Senator Daines, this should be encouraged and not stifled, as bitcoin mining is one of the few growth industries with immediate, long-term prospects in the state.

Speaking during a U.S. Senate Energy and Natural Resources Committee meeting recently he said:

"As the demand for Bitcoin miners increases and supply of cheap, reliable electricity from coal generation decreases, this could pose a threat [to] the expansion of Bitcoin generation and an even greater threat to energy supply and prices for Montana as a whole."

Montana's Unique Crypto-Positive Atmosphere

It will be recalled that Montana is currently one of the most crypto-positive states in the U.S., offering permission to bitcoin mining operations before any other state in the country.

Governor Steve Bullock also announced last year that, out of a special fund meant to stimulate economic activity and boost growth in the state, $416,000 was allocated to Project Spokane.

Alongside low energy costs, Montana's low temperatures are also a draw for coin miners who want to save costs on cooling, as ASIC miners and other related mining hardware require temperature controls to keep from overheating. Mining companies that have taken advantage of Montana's unique comparative advantage include CryptoWatt LLC and Bonner Bitcoin.

CryptoWatt's facility in the town of Butte has an exclusive agreement with the Colstrip coal-fired plant to supply it 64MW, and it’s one of the largest consumers of electricity in the state. Located in Missoula, Bonner Bitcoin's data center,Project Spokane, is also undergoing expansion to take its total number of mining rigs from 12,000 to 55,000. This could mean more controversy for the company whose neighbors have complained about the noise levels of its hardware in the past.

Speaking with Bitcoin Magazine, CryptoWatt Chief Communications Officer Matt Vincent said they chose coal for their current power contract because it was the most "competitive on the market for our intents and purposes at the time."

The company, however, has a number of "competitive alternatives for power contracts" and he expects them to be adequately secured before the closure in 2027.

"We will continue to strategically and responsibly evaluate the best options for our needs in the future, and we have a lot of confidence that Montana will continue to be the best place for us into the future. We consider sustainable options (wind, solar and hydro) every bit as viable for us as coal and we will always strive to do what’s in the best interest of our company in balance with the communities in which we are invested," he said.

Elsewhere in the States, mining operations in New York may benefit from plans to revitalize the Valatie Falls hydroelectric dam. DPW Holdings has spearheaded the restoration process to power its subsidiary’s cryptomining farm in the state of New York.

In a statement released to the media, DPW Holdings said the project is an "important step" in creating a "self-sustaining cryptocurrency mining business."

Notable Findings

In perhaps its most salient insight, the survey found that 84 percent of executives questioned say “their organizations have at least some involvement with blockchain technology.”

Of those with eyes and ears on the technology, 64 percent report “having a blockchain project underway,” while another 34 percent indicat that their projects are only in the research or theoretical phase of development. For those companies that haven’t made much progress, cost, lack of knowledge to begin and lack of governance were cited as the most formidable obstacles to development.

The report goes on to state that Gartner anticipates that blockchain-focused initiatives will generate some $3 trillion in business value annually by 2030. Gartner also finds that blockchain use cases are expanding as the market matures. While 84 percent of industry projects focused on financial services in 2017, that number has fallen to 46 percent in 2018, the research company claims.

The sentiment captured with PwC’s survey reflects Gartner’s research. While most respondents find blockchain technology most ripe to disrupt the financial services industry, other sectors — including industrial products and manufacturing, energy and utilities, and healthcare — were listed as the next top industries that could benefit from the blockchain’s functionality.

Still, even with expanding use cases, PwC’s respondents are cautious and measured in their outlook. Most believe that blockchain technology still faces barriers to adoption that shouldn’t be ignored. Of these concerns, regulatory uncertainty ranked as the highest concern at 48 percent, with lack of trust among users (45 percent) and the ability to “bring the network together” (44 percent) close behind as predominant concerns.

Survey respondents also recognize the United States as a clear leader in the blockchain space, though they believe that China will usurp this position in three to five years time, as well.